Fracking gold rush lifts Halliburton as well backlog swells

Halliburton Co. and Schlumberger Ltd. may have the power to charge higher prices for their oilfield services through 2012 thanks to a backlog of unfinished oil and natural gas wells that tripled in the past year.

The number of onshore wells in the U.S. and Canada waiting in line for the workers and equipment needed to complete them for production has risen to 3,500 from 1,145 in the second quarter of 2010, according to Houston-based Halliburton. Producers are seeing delays as long as six months.

The North American onshore drilling boom, driven by companies rushing to exploit shale-rock formations, sent demand skyrocketing for oilfield services such as hydraulic fracturing that cracks the rock to release gas and oil. Rigs drilling on land in the U.S. increased by 20 percent in the past year to 1,833 as of last week, according to Baker Hughes Inc. data.

Servicers are "like the people that sold the picks and shovels during the gold rush in California," said Allen Brooks, managing director with Houston-based investment bank Parks Paton Hoepfl & Brown.

The swelling backlog of wells to be completed gave oilfield services companies the power to raise prices more than 16 percent last year. It may accelerate consolidation in the industry as companies expand to meet demand, said Brian Uhlmer, an analyst at Global Hunter Securities in Houston.

The Philadelphia Oil Service Sector Index, a group of 15 names, has climbed 46 percent over the past year, while the Standard & Poor's 500 index is up 17 percent, and the S&P's explorers and producers index has risen 24 percent.

Halliburton, Schlumberger and Baker Hughes, the largest providers of hydraulic fracturing services in the U.S. with more than 1 million horsepower each in pressure pumping equipment, are expected to expand earnings 46 percent this year, according to analyst estimates compiled by Bloomberg.

New technology allows rigs to punch holes in the ground faster, while advanced production techniques mean it takes longer to finish the well, including multiple rounds of hydraulic fracturing that injects a mixture of water, sand and chemicals into the well to break open the rock so oil and gas can flow.

Demand for so-called fracking may continue to exceed supply into 2013, Uhlmer said.

"Right now our customers can't get enough of us," Mark McCollum, chief financial officer of Halliburton, told analysts and investors May 24. "There's really been no discussions on any customers' point of slowing this process down for the foreseeable future."

Explorers and producers are expected to spend $122 billion in the U.S. this year, James Crandell and Omar Nokta, analysts at Dahlman Rose & Co., wrote in a June 7 note to investors.

Kurt Hallead, an analyst at RBC Capital Markets, said in December that fracking prices that rose 16 percent in the first half of 2010 would continue to climb.

Whiting Petroleum Corp., a Denver-based oil producer, has seen a 10 percent increase in total well costs in North Dakota's Bakken Shale in the past year, said John Kelso, director of investor relations. The biggest driver of the increase is a 20 percent to 30 percent jump in the cost of fracking, he said.

Revenue from pressure pumping should surpass offshore drilling this year to become the largest segment in the equipment and service industry, according to a May 31 note to investors from Global Hunter, citing Spears & Associates.

Dear President Obama, We—a group of Nobel Peace Laureates— are writing today to ask you to do the right thing for our environment and r...

There was an error in this gadget

GOT INFORMATION?

If you've got information or documents about natural gas in Colorado, we'd love to hear from you. If you have a complaint to file regarding toxic water etc... CLICK HERE , or contact us at WTFrack.org@gmail.com

We will always honor your privacy so if you wish to remain anonymous, please indicate so.................................................

Objectivity and Validation

WTFrack.org does not engage in any illegal activities to acquire any of its information whatsoever. We operate in good faith and only use the open lines of public access that are offered to the general public. WTFrack.org's methods are exponentially effective and efficient in cataloguing, sorting and displaying data. We are investigators and obtain and display factually unaltered information that is open to the public from its source(s). No information was and will ever be obtained through any protected database or website. This information is available to the general public nation-wide.

WTFrack.org logo may be used for non-sale related purposes only. Please cite WTFrack.org and send us a written intent of use.

WTF TWEET

About Us

We are concerned citizens acting in good faith against the destruction of the environment, exploitation of OUR natural resources and the endangerment of public health. The system is not working. Our purpose is to be a resource for the public to make its own objective findings. We want clean air, clean water, clean energy. We want real laws that protect the people and the environment. We want accountability. We are representatives of Democracy. We are you.We are 'Fractivists.'

Denver, Colorado United States

This site has no copyright on the published materials unless otherwise noted. All contents otherwise belong to the original publisher. Re-use only with their permission.

WTFrack.org is not responsible for the expressed opinions of its users. Just like all of the oil companies.

DisclaimerTHIS SITE IS PROVIDED BY THE WTFRACK.ORG ON AN "AS IS" BASIS. THE WTFRACK.ORG MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, AS TO THE OPERATION OF THE SITE OR THE INFORMATION, CONTENT, MATERIALS, OR PRODUCTS INDLUCED ON THIS SITE. TO THE FULL EXTENT PERMISSIBLE BY APPLICABLE LAW, WTFRACK.ORG DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. WTFRACK.ORG WILL NOT BE LIABLE FOR ANY DAMAGES OF ANY KIND ARISING FROM THE USE OF, OR INABILITY TO USE, THIS SITE, INCLUDING, BUT NOT LIMITED TO DIRECT, INDIRECT, INCIDENTAL, PUNITIVE, AND CONSEQUENTIAL DAMAGES.

IndemnificationYou agree to indemnify WTFRACK.ORG and its officers, directors, volunteers, agents, distributors, and affiliates from and against any and all third party claims, demands, liabilities, costs, or expenses, including reasonable attorney's fees, that arise from your use or misuse of this site.